TIOL-DDT 1137 · the untouched capture
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<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong><font color="#663399" size="3">TIOL-DDT 1137 </font><br>
22.06.2009 <br>
Monday </strong></font></p>
<p align="center"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong><font color="#006600">No Practice for Retired ITAT Members</font></strong></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>IN <em>P. C. Jain vs. UOI</em> - </strong></font><font size="1" face="Verdana, Arial, Helvetica, sans-serif"><strong><a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=51&filename=legal/hc/2009/2009-TIOL-185-HC-DEL-CESTAT.htm">2009-TIOL-185-HC-DEL-CESTAT</a></strong>,</font><font size="2" face="Verdana, Arial, Helvetica, sans-serif"> the
Petitioners (retired Members of CESTAT) contended that the provision in Section
129 (6) of the Customs Act, 1962 is <em>ultra vires </em> Articles 14, 19
(1)(g) and 21 of the Constitution in as much as the said provision is discriminatory
and effects their right to livelihood. The petitioners also contended that
members of other Tribunals like Income Tax Appellate Tribunal and Appellate
Tribunal for Foreign Exchange are not disabled from practising before the
respective Tribunals. These contentions were set aside and the High Court
ruled that the provision barring retired Members of CESTAT from practising
before the CESTAT is neither unconstitutional nor discriminatory.</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The High Court had noted, “<em>The learned ASG also brought to our notice an inter-departmental letter dated 20.09.2007 exchanged between the Ministry of Law and Justice, Department of Legal Affairs and the Department of Revenue' which suggested that the Government was in principle agreed that steps should be initiated to bring about a suitable amendment so that similar bar could be incorporated in the Income Tax Act, in respect of, members of the Income Tax Appellate Tribunal.”</em></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Now the Law Ministry has acted as informed to the High Court and the provisions of ITAT (Recruitment and Conditions of Service) Rules, 1963 are amended to bar retired Members, Vice President and President of ITAT from practising before ITAT. In addition to this another rule was inserted that during their service they are also barred from undertaking any arbitration work while working in these capacities in the Tribunal. Though the Delhi High Court overruled the CESTAT Members' contention of discrimination, the Law Ministry sought to cure this perceived discrimination by amending the service condition rules for ITAT. Now, with these latest amendments the grouse of the retired Members of CESTAT is doused statutorily as well.</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">But is the current amendment enough to bar the ITAT Members, VPs and President from practising before ITAT?. In fact, there is a slight distinction in the provisions incorporated for restricting the President, VPs and Members of ITAT from practising before ITAT when compared with similar provision incorporated for the President, VPs and Members of CESTAT.</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"> While Rules 13E and 13F of Income Tax Appellate Tribunal Members (Recruitment and Conditions of Service) Rules, 1963 states as follows:</font></p>
<blockquote>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><em>“13E. The President, the Senior Vice-President, the Vice-President and the Members of the Tribunal shall not practice before the Tribunal after retirement from the service of the Tribunal.</em></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><em>13F. The President, the Senior Vice-President, the Vice-President and the Members of the Tribunal shall not undertake any arbitration work while functioning in these capacities in the Tribunal.” </em></font></p>
</blockquote>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Section 129(6) of the Customs Act, 1962 stipulates as follows:</font></p>
<p align="justify"> <font size="2" face="Verdana, Arial, Helvetica, sans-serif"><em>"(6) On ceasing to hold office, the President, Vice-President or other Member shall not be entitled to appear, act or plead before the Appellate Tribunal."</em></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">While the CESTAT President, VP and Members cannot practice before CESTAT after ceasing to hold office in the CESTAT, ITAT President, VP and Members cannot practice before ITAT only after retirement. So, if a Member, VP or even President of ITAT resigns from his/her post, there is no bar for them to practice before ITAT because the relevant rule only says that they shall not practice before the Tribunal after retirement. Whereas for the Members, VPs and President of CESTAT, even if they resign from their posts, they are not entitled to practice because the relevant provision says 'on ceasing to hold office'. This is certainly a bit unfair considering the fact that both their positions are at par.</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">This entire episode raises a pertinent question. Do the retired Members of Tribunals need to be told by the Court or declared by the Statute that they are not eligible to practice before the respective Tribunals? When a High Court judge retires from his/her position, if they intend to practice post retirement, they do not practice before any High Court or lower Courts but appear only before the Supreme Court. This not only enhances their stature but also protects the dignity of the Judiciary and the individual alike. Likewise, the retired Members of ITAT or CESTAT or for that matter any Tribunal should have voluntarily refrained from practising before the respective Tribunals or any forum lower to the Tribunals and practice before High Courts or Supreme Court (It's another matter if they do not have a law degree – they may acquire one – better late than never). In fact, the former President of CESTAT Justice R K Abhichandani is practising in the Supreme Court and the Apex Court honourably designated him as a ‘Senior Advocate.'</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong><a href="http://www.taxindiaonline.com/RC2/inside2.php3?filename=wnew/ministry_law_notification.htm" target="_blank">GSR 889 (E) NOTIFICATION Dated: June 3, 2009</a></strong></font></p>
<p align="center"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong><font color="#006600">Give up the ‘total income concept' – Justice Rangarajan</font></strong></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Justice Rangarajan, former High Court Judge and ITAT Vice-President, in a mail to <strong>DDT</strong>, states,</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The department is trying out hi-tech methods for tracking assessees. The USA has a system of gathering all the data from various sources and making a public profile of the assessee and sending it to the taxpayer.</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">If the taxpayer agrees he can pay tax according to that estimate or he can contest it with evidence. In a country like ours where only a small portion of all transactions are through electronic means, it will not be comprehensive. Still most of the banking and investment transactions are transparent. The problem is that those honest transactions of those who are mostly salaried class or senior and retired persons invite scrutiny and cause a lot of harassment.</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The NRIs already have an option not to file a return if the investment income is taxed at source - see Section 115-I. My suggestion is to give up the total income concept and extend the benefit of section 115-I to all salaried class and senior citizens. This will reduce the routine work of the department to such an extent and same money spent on tax compliance that there can be better concentration on ferreting out concealed income.</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">If the concept of total income is to be retained, then the procedure of deducting tax at source by the payer should be substituted by requiring all assesses to route all receipts through a specified bank account and deduct tax from that account. This will also relieve the payers from the burden of deducting tax at source and save money.</font></p>
<p align="center"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong><font color="#006600">Annual Confidential Reports – Can't the Reviewing officer change the grading?</font></strong></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Annual Confidential Report is a weapon in the hands of senior officers to control their subordinates. Also to shower favours on subservient subordinates. A government servant's altitudinal ladder is filled with the steps of the ACRs . There is a reporting officer and a reviewing officer who study the work of the subordinates and report on their performance and grade them from ‘excellent' to ‘poor'. Any adverse report is communicated to the employee who can submit his explanation and the reports are again reviewed. But in <strong>both
the Revenue Boards</strong>, the reporting and reviewing system is in shambles. With frequent transfers of officers and with no respect for time frame, these reports and reviews are not written on time nor reviewed with the result that at the time of promotion/deputation, many officers find that their ACRs are not up to date and they run from Pillai to Patel to get the ACRs written and most often some of the reporting or reviewing officers must have retired. The CBEC website has a list of pendency of ACRs of officers as on 30.09.2005, which prominently includes the senior most officers of the Department. After 2005, they have also not updated the list.</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Now there is a question. Can the reviewing officer change the grade awarded by a reporting officer if he has expunged the remarks of the Reporting officers? The answer should obviously be YES, because the expunging does not serve any purpose if the grading is not changed. But there is a view that the reviewing officer cannot change the grading. Then there is no purpose in review at all. Suppose a reporting officer states that the subordinate does not understand the Central Excise Rules and so grades him as ‘poor' and the reviewing officer finds that this was the officer who drafted the Central Excise Rules and it was the Reporting Officer and not the Reported Officer who did not understand the Rules; can't he change the grading?</font></p>
<p align="center"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong><font color="#006600">‘Annual Confidential Report' is now ‘Annual Performance Assessment Report' (APAR)</font></strong></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">As per the existing provisions only adverse remarks should be communicated to the officer reported upon for representation, if any. The Supreme Court has held in the case of <em><strong>Dev Dutt vs Union of India</strong> </em> (Civil Appeal No.7631 of 2002) - </font><font size="1" face="Verdana, Arial, Helvetica, sans-serif"><strong><a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=50&filename=legal/sc/2008/2008-TIOL-104-SC-SERVICE.htm" target="_blank">2008-TIOL-104-SC-SERVICE</a></strong></font><font size="2" face="Verdana, Arial, Helvetica, sans-serif"> that
the object of writing the confidential report and making entries is to give
an opportunity to the public servant to improve the performance.</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">So the Government has changed the whole system of ACRs . Instead of <em>Annual Confidential Report</em>, it will now be called <em>Annual Performance Assessment Report </em>(APAR).</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The full APAR including the overall grade and assessment of integrity shall be communicated to the <strong>concerned </strong> officer after the Report is complete with the remarks of the Reviewing Officer and the Accepting Authority.</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The <strong>concerned </strong> (here he is really concerned) officer shall be given the opportunity to make any representation against the entries and the final grading given in the Report within a period of fifteen days from the date of receipt of the entries in the APAR. The representation shall be restricted to the specific factual observations contained in the report leading to assessment of the officer in terms of attributes, work output etc. While communicating the entries, it shall be made clear that in case no representation is received within the fifteen days, it shall be deemed that he/she has no representation to make.</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The new system of communicating the entries in the APAR shall be made applicable prospectively only with effect from the reporting period 2008-09 which is to be initiated after 1st April 2009. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The competent authority for considering adverse remarks under the existing instructions may consider the representation, if necessary, in consultation with the reporting and/or reviewing officer and shall decide the matter objectively based on the material placed before him within a period of thirty days from the date of receipt of the representation. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The competent authority after due consideration may reject the representation or may accept and modify the APAR accordingly. The decision of the competent authority and the final grading shall be communicated to the officer reported upon within fifteen days of receipt of the decision of the competent authority by the concerned APAR Section. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Isn't the whole system of reporting a subordinate's performance a big farce? If a totally corrupt officer has to report on the integrity of a totally honest officer, where is objectivity in the whole scheme? Senior officers, whom the government found best fit to be in jail, have written the ACRs of their subordinates. Can't we just do away with this nonsense? </font></p>
<p align="justify"><a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=70&filename=pitara/oms/office_%20memorandum.htm" target="_blank"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>DOPT OFFICE MEMORANDUM Dated: May 14, 2009 </strong></font></a></p>
<p align="center"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong><font color="#006600">Jurispruden</font><font color="#FF6633" size="5">tiol</font><font color="#006600">–Tuesday's cases</font></strong></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong><font color="#FF6633" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong><strong><strong><strong><strong><strong><strong><b><img src="http://www.taxindiaonline.com/RC2/image/stories/ddt_hammer.jpg" alt="Legal Corner Icon" width="100" height="84" hspace="5" border="0" align="left"></b></strong></strong></strong></strong></strong></strong></strong></font></strong></font></strong></font></strong></font><font color="#663399">Central Excise </font></strong></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong><font color="#FF6600">Where amount to be recovered is for a period beyond normal period of limitation, it is necessary that ingredients for invoking longer period of limitation under section 11A should be alleged in show-cause notice and established by Revenue: CESTAT </font></strong></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>THE </strong>appellant is a registered manufacturer and also undertakes job work. The job-worked goods are cleared to the principal manufacturer in terms notification 83/94-CE without payment of duty. Incidentally, the assessee uses common cenvatted inputs for manufacture of goods on his own account which were cleared on payment of duty and those manufactured on job work basis. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong><font color="#663399">Income Tax </font></strong></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong><font color="#FF6600">Indo-Korea DTAA - NRC has project office in Mumbai - works on multiple projects but for less than 9 months - Project office cannot be held as Permanent Establishment as a PE begins to exist only when an enterprise commences business through a fixed place - Provisions of Article 5(3) override provisions of Article 5(1) and 5(2) of tax treaty: ITAT </font></strong></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>FOR</strong> taxing income receipts of a non-resident company, having a Permanent Establishment (PE) is one of the pre-requisites. In this case, involving a Korean MNC, the Tribunal has held that merely because the assessee has a project office in Mumbai and it does initial correspondence with a prospective client for an engineering contract, it cannot be termed as a PE. PE begins to exist only after an enterprise commences its business through a fixed place. The Tribunal has also held that the provisions of Article 5(3) are specific as compared to those of Articles 5(1) and 5(2) of the Indo-Korean DTAA, so as to override the provisions contained in Articles 5A (1) and 5(2). </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong><font color="#663399">Customs</font></strong></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong><font color="#FF6600">Rate of duty on time expired warehoused goods – if extension is applied and pending, duty cannot be demanded by applying rate of duty on date of expiry of warehousing period: CESTAT by majority</font></strong></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>THE </strong>appellant is a 100% EOU . The unit imported certain inputs for which the warehousing period was extended up to 29 th November 2001. Subsequently also they applied for extension of warehousing period, but there was no response from the department. Finally in 2003 the appellant removed the goods on payment of duty. Revenue demanded duty by applying the rate of duty as on 29 th November 2001 whereas the appellant contended that the rate of duty applicable is the rate as on the date of payment of duty in 2003. The Commissioner (Appeals) confirmed the revenue's contention and the matter reached CESTAT.</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong><font color="#663399">See our columns Tomorrow for the judgements</font></strong></font></p>
<p align="justify"><font color="#FF6600" size="2" face="Verdana, Arial, Helvetica, sans-serif">Until Tomorrow with more <strong>DDT</strong></font></p>
<p align="justify"><font color="#FF6600" size="2" face="Verdana, Arial, Helvetica, sans-serif">Have a nice day.</font></p>
<p align="justify"><font color="#FF6600" size="2" face="Verdana, Arial, Helvetica, sans-serif">Mail your comments to</font> <font size="2" face="Verdana, Arial, Helvetica, sans-serif"><a href="mailto:vijaywrite@taxindiaonline.com">vijaywrite@taxindiaonline.com</a></font></p>
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